Melvine's AI Analysis# 68 - Monday.com’s Terrible, Horrible, No Good, Very Bad Monday: What Google’s Algorithm Shift Means for Businesses
Melvine Manchau
Senior Strategy & Technology Executive | AI & Digital Transformation Leader | Former Salesforce Director | Driving Growth & Innovation in Financial Services | C-Suite Advisor | Product & Program Leadership
August 19, 2025
On August 11, 2025, Monday.com (NASDAQ: MNDY) announced its Q2 2025 earnings, delivering what appeared to be a stellar performance. Revenue soared to $299 million, up 27% year-over-year, surpassing analyst expectations of $293.5 million.
The company’s dollar-based net retention rate held steady at an impressive 111%, outpacing the median for SaaS companies. Enterprise growth was robust, with a record number of customers paying over $100,000 annually, and Monday CRM hit a milestone of $100 million in annual recurring revenue (ARR).
With $1.59 billion in cash and a non-GAAP operating margin of 15%, the numbers painted a picture of a thriving business.Yet, when the stock market opened that Monday, Monday.com’s shares plummeted over 23%.
The culprit? A single comment from co-CEO Roy Mann during the earnings call: “We are seeing some softness in the market due to Google algorithm.” This statement, coupled with management’s apparent unpreparedness for the barrage of analyst questions that followed, sent shockwaves through the investment community and revealed a seismic shift in the digital landscape—one that businesses reliant on Google’s search engine can no longer ignore.Inspired by Jon Russo’s post and my own research into Generative Engine Optimization (GEO),
I dove into Monday.com’s earnings call to uncover what happened and what it means for companies navigating the new era of AI-powered search. Here’s what I found—and why it’s a wake-up call for businesses everywhere.
The Google Algorithm BombshellDuring the Q2 2025 earnings call, Roy Mann pointed to Google’s July 2025 algorithm update—specifically the introduction of AI Overviews, AI-generated snippets that appear at the top of search results—as a key driver of “softness” in Monday.com’s customer acquisition, particularly in the lower-tier SMB (small and medium-sized business) segment.
This update, which emphasizes stricter E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness) guidelines and prioritizes user experience and AI-generated content, has reshaped how users discover products and services online.For Monday.com, a company that has historically relied on organic search traffic to fuel its marketing funnel, this shift was a gut punch.
AI Overviews often provide synthesized answers directly on Google’s search results page, reducing the need for users to click through to external websites. For businesses like Monday.com, this translates to lower organic traffic, fewer high-intent leads, and a direct hit to customer acquisition.The impact was evident in the earnings call, where analysts pounced on Mann’s comment.
Brent Thill from Jefferies LLC led the charge, asking, “What percent [of the business] was impacted by the Google change?”
Raimo Lenschow from Barclays pressed further, seeking clarity on how Google’s changes would unfold.
Co-CEO Eran Zinman’s response was telling: “We don’t control exactly how Google will play this out, so we’re trying to understand what the implications are.”
Matthew Bullock from Bank of America Merrill Lynch went straight to the heart of the issue: “Why call this out now? How did the influence of Google SEO disruption change this quarter versus Q1?”
Management’s answers were vague, with Mann admitting they were optimizing budgets in real-time but hadn’t fully grasped the issue until Q2 results came in.
This lack of preparedness amplified investor anxiety, contributing to the stock’s steep decline.
The Rise of Generative Engine Optimization (GEO)
Monday.com’s experience is a case study in the growing importance of Generative Engine Optimization (GEO)—a new paradigm for optimizing content in an era where AI-driven search engines like Google’s AI Overviews dominate. Unlike traditional Search Engine Optimization (SEO), which focuses on ranking in organic search results, GEO requires businesses to tailor their content to be prioritized in AI-generated summaries.
This means crafting concise, authoritative content that aligns with E-E-A-T principles, leverages structured data, and is easily interpretable by AI algorithms.Monday.com’s “softness” in SMB customer acquisition suggests its website and marketing funnel weren’t fully optimized for GEO.
As AI Overviews siphon traffic away from traditional organic search results, companies that fail to adapt risk losing visibility to high-intent buyers.
This is particularly critical for SaaS businesses like Monday.com, which rely on SMBs discovering their platform through Google searches for terms like “project management software” or “team collaboration tools.”
The company’s response—reallocating resources to alternative performance marketing channels and optimizing ad strategies—signals a recognition of this shift. But the earnings call revealed a deeper challenge: even a high-performing company like Monday.com was caught off guard by the speed and scale of Google’s AI-driven changes.
Why the Stock Tanked Despite Monday.com’s strong financials, several factors fueled the market’s dramatic reaction:
Investor Sensitivity to Google’s Impact: Mann’s mention of the Google algorithm sparked fears that a core pillar of Monday.com’s growth strategy—organic search—was under threat. The lack of clear quantification or a robust mitigation plan left analysts and investors rattled.
GAAP Operating Loss: While non-GAAP metrics showed profitability, Monday.com reported a GAAP operating loss of $11.5 million in Q2 2025, compared to a $1.8 million profit in Q2 2024. This raised concerns about the company’s path to sustainable profitability.
Cautious Guidance: Despite beating expectations, Monday.com’s Q3 guidance ($311–$313 million, 24–25% growth) and full-year 2025 guidance ($1.224–$1.229 billion, ~26% growth) didn’t reflect a significant upward revision. Analysts like Kash Rangan from Goldman Sachs noted that the lack of a guidance raise, despite enterprise strength, suggested the company wasn’t at an inflection point.
Market Sentiment: Posts on X reflected mixed reactions. Some users, like
Lessons for Businesses in the AI-Driven Search Era
Monday.com’s “Terrible, Horrible, No Good, Very Bad Monday” is a harbinger of broader challenges for companies reliant on Google’s algorithm. As AI-powered search reshapes the digital landscape, here are key takeaways for businesses:
Embrace Generative Engine Optimization (GEO): Companies must optimize for AI-driven search by creating concise, E-E-A-T-compliant content that AI algorithms can easily parse and prioritize. This includes leveraging structured data, schema markup, and authoritative content to maintain visibility in AI Overviews.
Diversify Marketing Channels: Monday.com’s shift to alternative performance marketing channels underscores the need to reduce reliance on Google’s organic search. Businesses should invest in paid ads, social media marketing, content partnerships, and other channels to diversify their acquisition strategies.
Monitor and Adapt in Real-Time: Monday.com’s delayed recognition of Google’s impact highlights the importance of proactive monitoring. Companies must track algorithm changes and their effects on traffic and conversions, adapting strategies swiftly to stay ahead.
Segment-Specific Strategies: Monday.com’s enterprise segment remained a bright spot, with record high-value customer adds. This suggests that larger organizations, less reliant on organic search, are less vulnerable to AI-driven disruptions. SMB-focused businesses, however, must double down on GEO and alternative channels to maintain growth.
Communicate Proactively with Stakeholders: The earnings call exposed a communication gap, as management’s vague responses fueled investor uncertainty. Businesses must clearly articulate their strategies for navigating algorithm changes to maintain confidence among analysts and shareholders.
The Bigger Picture: A New Digital Reality
Monday.com’s experience is likely the first public acknowledgment of the tangible impact of Google’s AI Overviews on a company’s performance. It validates the thesis that AI-powered search is disrupting traditional SEO models, forcing businesses to rethink how they reach customers.
As Google continues to prioritize AI-generated content, more companies—especially those targeting SMBs—may report similar challenges in their earnings calls.However, there’s reason for optimism. Monday.com’s enterprise strength, with 46 million AI-driven actions and a thriving CRM product, demonstrates resilience.
The company’s proactive shift to alternative marketing channels suggests it’s adapting to the new reality. Posts on X also indicate that some investors view the sell-off as an overreaction, with potential for recovery as Monday.com refines its strategy.
Looking Ahead
As we move deeper into the era of AI-driven search, Monday.com’s Q2 2025 earnings call serves as a critical case study. Businesses must act now to optimize for GEO, diversify their marketing funnels, and communicate clearly with stakeholders. Those that adapt will thrive in the new digital landscape; those that don’t risk their own “Terrible, Horrible, No Good, Very Bad Monday.”I’ll continue tracking earnings calls and industry trends to see if other companies report similar challenges. For now, Monday.com’s experience is a clarion call: the age of AI-powered search is here, and businesses must evolve to stay visible, relevant, and competitive.What do you think? Have you noticed shifts in your own business due to AI-driven search? Let’s discuss in the comments.
Sources: Monday.com Q2 2025 Earnings Call Transcript, X Posts, Stocktwits Sentiment Data, Google Algorithm Update Analysis (July 2025).
